As the universal body of knowledge grows, intellectual property becomes more and more an important part of society and its owners realize the benefits of commercializing it through licensing or litigation. Even though accountants have long been perplexed by inability to fix a sum-certain value for intellectual property, that fact does not detract from its importance as an income producing asset. In fact, it has been reported that 25% of the exports of the United States are in the form of intellectual property. Frequently, this intellectual property takes the form of patents, copyrights, trademarks and associated know-how.
As is typically the case, when any class of assets becomes significant to the holder and to the economy in general, the financial community will respond. In the case of intellectual property, not only has the financial community responded with venture capital financing for start-ups, initial public offerings and consortiums formed to promote the products of the intellectual property but, now the financial community is providing contributors of funds for the enforcement of intellectual property rights.
Those skilled in intellectual property matters recognize that patents, copyrights and trademarks are created by national and state laws and, in fact, all confer upon the owner a negative right. This negative right is in the form of the power to exclude others from making, using, selling, offering for sale or otherwise using the works, mark, process, machine, manufacture or composition of matter defined by the respective copyright, trademark or patent(s). It is, however, well recognized that intellectual property enforcement lawsuits are among the most expensive forms of litigation in the United States. Frequently, then, the value of the intellectual property asset is measured by the owners ability to enforce the rights conferred thereby. Consequently, large corporations such as Honeywell Inc. and Texas Instruments have been recognized to have valuable intellectual property assets principally because of their success in enforcing those assets against competitors.
It is not surprising, therefore, that more than 50% of the patent lawsuits in the United States are brought by large well financed organizations which can more easily afford the cost. That is not to say that large organizations are free to bring intellectual property infringement suits in unbridled fashion, for there first must be an infringer to sue, and second, even these organizations are subject to budgetary constraints with patent infringement suits being assigned a relative priority vis-a-vis other uses of corporate capital.
By way of illustration, in 1991, there existed approximately 1.3 million unexpired U.S. patents. Those patents were held by approximately 109,000 corporations and 225,000 individuals. Of those entities, fewer than 4,000 of the largest corporations holding 100 or more unexpired patents accounted for more than 50% of the lawsuits, while the individuals and approximately 80,000 companies owning three or fewer patents (305,000 entities in total) accounted for only about 75% of the balance. Interestingly, large corporations, measured by both revenue and number of patents held, made up more than 50% of the total number of defendants. (There is, of course, generally a direct relationship between the number of patents held and the revenues generated by a corporation.)
Thus, in the overall picture it is the individuals and small companies who are without the means to enforce their patents and consequently, without the means to develop their patents' full potential. A significant need thus exists for a financial capability to commercialize and especially to license and/or enforce intellectual property. This financial capability must be offered expeditiously, efficiently and at low cost. It is against this background that the present invention is most easily understood.